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Volume 7 - Opinions of Counsel SBEA No. 76

Opinions of Counsel index

Assessments, generally (parcel) (definition of) (time share condominium) - Real Property Law, Article 9-B; Real Property Tax Law, §§ 102(11), 502:

A time share in a condominium unit does not constitute a parcel for purposes of preparing an assessment roll.

We have been asked whether a “time share” in a condominium unit constitutes a condominium “unit” which must be entered on the assessment roll as a separate parcel in accordance with the provisions of section 339-y of Article 9-B of the Real Property Law, which governs the assessment and taxation of condominiums. A purchaser of a time share acquires an interest in property, usually a room or suite in a resort development, for a period of time, usually a week or multiple weeks, which recurs each year.

Absent legislative action, it is our opinion that time shares in a condominium may not be described and assessed as separate parcels on an assessment roll. Time shares are merely interests in property for a recurring period of time, not separate units of real property.

In pertinent part, subdivision 2 of section 502 of the Real Property Tax Law requires that the assessment roll include “provision . . . with respect to each separately assessed parcel of real property for the entry . . . of the name of the owner, last known owner or reputed owner and a description sufficient to identify the same . . .”. A “parcel” is defined as “a separately assessed lot, parcel, piece or portion of real property . . .” (Real Property Tax Law, § 102(11)); see, L.1982, c.603).

For purposes of the assessment and taxation of real property, a condominium unit is defined as a “parcel”. Subdivision 1 of section 339-y of the Real Property Law provides, in part, that “Each unit and its common interest, not including any personal property, shall be deemed to be a parcel and shall be subject to separate assessment and taxation by each assessing unit . . .”. A “unit” is defined in subdivision 13 of section 339-e of the Real Property Law as “a part of the property intended for any type of use or uses, and with an exit to a public street or highway or to a common element or elements leading to a public street or highway, and may include such appurtenances as garage and other parking space, storage room, balcony, terrace and patio” (emphasis added).

The term “property” is defined in subdivision 1 of section 339-e as follows:

“Property” means and includes the land, the building and all other improvements thereon, owned in fee simple absolute, and all easements, rights and appurtenances belonging thereto, and all other property, personal or mixed, intended for use in connection therewith, which have been or are intended to be submitted to the provisions of this article.

Time share “is a generic term. It describes an interest in property whereby a number of persons own, or have the exclusive right to use, a piece of property for a specified time period.” Eastman, Time Share Ownership: A Primer, 57 N.Dak.L.Rev. 151, at 152 (1981). There are three general types of time shares: vacation lease or license, tenancy-in-common, and interval ownership. In the first, the vacation lease or license, an owner buys the right to use a unit for a specific period of time each year, with ownership of the unit remaining in a management organization. In the second, the tenancy-in-common, an owner buys an undivided interest in the unit which is accompanied by a right to occupy the unit for a specific period of time each year. In the third, the interval ownership, an owner “buys” the unit for a specific period of time each year. See, Crosson, Time-sharing Ownership in Resort Developments, 45 Appraisal Journal 165, 166 (1977); Rohan and Reskin, Condominium Law and Practice, §§ 17.01 et seq.

It is our opinion that whatever the type or category of a timeshare, the assessor may not consider each time sharer’s interest as a separate parcel. As provided in Real Property Law, sections 339-e(13) and 339-y(l), the unit which must be described and assessed on the assessment roll as a separate parcel is a physical entity, “a part of the property”, not merely an interest in the property. Thus, as with any parcel, the assessor would not be required to separately describe or assess separate interests (see, 1 Op. Counsel SBEA No. 95.)

The courts have unequivocally declared that the assessor need not separately describe and assess separable interests in the same property. For example, one court stated as follows:

It was well settled at common law, unchanged by statute pertinent here, that the mortgagor, the vendee in possession, the lessor, the life tenant, or the co-tenants jointly, were bound to pay the entire tax on the property as if there were no mortgage, contract of sale, lease, remainder or co-tenant interests [citations omitted]. Thus, in any case, a single assessment of the property at its full value, as if not subject to a mortgage, a vendor interest, a lease, a remainder or cotenancy, is all that is required. (People ex rel. Gale v. Tax Commission, 17 A.D.2d 225, 233 N.Y.S.2d 501, at 504 (1st Dept. 1962), lv. to app. den., 12 N.Y.2d 646 (1963) (emphasis added).)

This would be true whether the holders of the time share interests were “licensees” or tenants in common (see, 5 Op.Counsel SBEA No. 66.) It is our opinion that these types of time shares would be subject to the general rule that assessors are not required to look into the arrangements made by the owners of property among themselves. (See, Doughty v. Loomis, 9 A.D.2d 574, 189 N.Y.S.2d 413 (3d Dept. 1959), aff’d, 8 N.Y.2d 722, 167 N.E.2d 643, 201 N.Y.S.2d 100 (1960).)

The third type of time share, interval ownership, involves different considerations, as suggested in the two following law review excerpts. In the first of these, the writer noted that:

[T]he interval estate owner acquires a defeasible fee in the form of an estate for years for the time period in each year during which he is entitled of occupancy. This defeasible fee will continue to vest in the owner for a period of years equal to the expected useful life of the [unit. The owner also acquires] a vested remainder as a tenant in common with the other interval estate owners of the unit. Note, Legal Challenges to Time Sharing Ownership, 45 Mo.L.Rev. 423, at 427 (1980).

In the second article, the author stated that:

This concept is not unique because it involves common law estates, as does the tenancy-in-common approach. It is unique, however, in that title and the right to occupancy co-exist and are created simultaneously by the same deed. There is no contract, no lease, no operating agreement or declaration which establishes the right to occupancy. Davis, Time Share Ownership-Legal and Practical Problems, 48 St. John’s L. Rev. 1183, at 1187 (1974).

Thus, the uniqueness of interval ownership does not lie in the estates conveyed, which are the common law estate for years, annually defeasible, and tenancy-in-common. {*}

Since interval ownership is comprised of common law interests which are less than fee simple ownership, the rationale of the Gale case, supra, would, absent specific statutory direction to the contrary, prevent the description of intervals as separate parcels on assessment rolls. (It has been suggested that such statutory direction will generally be necessary for separate entry of intervals in jurisdictions which require the separate entry of condominium units. Note, Mo.L.Rev., loc. cit.).

There is, of course, no question that the New York Legislature could provide for the separate assessment and taxation of time shares. {**}  This was done in the original Colorado Time Share Act. (Colo. Rev. Stat. § 38-33-111(2)), although this provision was subsequently repealed (1979 Colo. Sess. Laws, p. 1397; see, Board of Commissioners, Eagle County v. Colorado Board of Assessment Appeals, 628 P.2d 156 (Colo. 1981).) In Utah, the definition of “unit” in the condominium act was amended to include time ownership, which thus became separately taxable. (Utah Code Ann., title 57, ch.8, §§ 3, 27.) Maine and South Carolina have enacted regulatory statutes without provisions for separate taxation. (Me.Rev.Stat., title 33, § 588; S.C. Code, title 27, ch.32.) Florida enacted rules and regulations governing time shares without any statutory authority for the interests’ creation. (2 Fla.Emer.Rules 76-1; Rohan and Reskin, op.cit., § 172.03(1).)

One final consideration is to whom should time share condominiums be assessed on an assessment roll. The present statutory scheme requires a determination of condition and ownership as of a particular date (taxable status date) for assessment administration purposes (Real Property Tax Law, § 302), and the name of the owner must be entered on the assessment roll prepared thereafter (§ 502(2)). In this regard, tenants in common and interval owners, as a group, do “own” a unit, since they have a freehold interest less than a fee. However, it is our understanding that all time share projects are administered by management groups. Thus, there is an entity to receive tax bills and ascertain tax liability amongst the owners. We therefore recommend that, for assessment administration purposes, one time share owner’s name be entered, followed by “et al.”, with a further notation that the parcel is under time share ownership. The management group should be designated as agent for the owners, with the group’s address as the tax billing address.

August 4, 1982

{*}  The tenancy-in-common is created to avoid possible violation of the Rule Against Perpetuities. St. John’s L. Rev. loc. cit. The New York Rule is contained in Article 9 of the Estates, Powers and Trusts Law (E.P.T.L.), and is against both vesting and suspension of alienation for more than lives in being plus twenty-one years. The concern is that a court may interpret the annual defeasibility as a springing or shifting use or interest voided by or subject to the Rule. See, Matter of Wilcox, 194 N.Y. 288 (1909). (Those interests subject to the Rule are listed in E.P.T.L. § 6-3.3). Whether the annual defeasibility is a subject interest, and whether the violation is avoided by the tenancy-in-common, are beyond the scope of this Opinion.

{**}  Due to the possible problems with time shares, the National Conference of Commissioners on Uniform State Laws has prepared two time share Acts, neither of which has been adopted in New York. The Uniform Condominium Act has been amended to provide for an interval estate and a time-span estate. The latter is a tenancy-in-common, the former an estate for years with a vested remainder. A Uniform Real Estate Time-Share Act has also been issued, with an extremely general definition which would include both tenancy-in-common and interval ownership. Neither provides for separate assessment and taxation.